Actions taken on TLC auction

BUFFALO – The result of the auction for Lake Shore Health Care Center did not end in bids for operation of the hospital, but bids for vacant land and the home health care business were considered in U.S. Bankruptcy Court Wednesday.

Attorney for TLC Health Network, Jeff Dove, said a bid for $100,000 for the vacant land was received from Tony Borrello, local businessman who is a leader of a group that previously expressed interest in the hospital.

Dove said there is still a question about the acreage listed in the bid document and TLC would like to keep a buffer zone between the property and the hospital.

He said this will be discussed with Borrello and asked Judge Carl L. Bucki to carry the awarding of the bid to the Aug. 25 hearing. This was granted.

Dove said two bids were also received for the home health care business; $1.3 million from HCR Home Care of Rochester and $250,000 from Post Acute Partners.

He explained, TLC be-lieves both of these bids are insufficient for two reasons.

“The first reason is the price. (The home health care business) gives a significant positive contribution to TLC’s bottom line, and the estimated current worth of the division is $2 million to $2.5 million. … Second, because it is a significant contributor to TLC’s assets, it would negatively affect operations to sell the so called ‘jewel,'” he added.

Although there were no bids submitted for the entire hospital’s operation, Dove said there is still interest.

“The Hill Group (TLC’s brokerage firm) has had ongoing conversations with entities interested in operating the hospital. There is interest out there, but they did not get a bid together in time for the auction. … That continues in the background, so to speak,” he explained.

Bucki asked if the interested parties have expressed wanting to operate the home health care business. Dove said he has been told that is a requirement for their interest, but it is not one of the reasons why TLC is rejecting the bids.

Bucki also asked when an offer is expected. Dove said there is no way of knowing. He also noted one of the two interested companies currently does not have the credentials to operate in New York state, which could take additional time if that goes forward.

The court also acted on several motions.

Attorney for UPMC Hamot, Guy Fustine, filed a motion to quash a subpoena from the creditors’ committee for documents for its investigation of claims by unsecured creditors. He argued that the request from the committee was deficient because the Western District Court of New York does not have jurisdiction over a hospital in Erie, Pa., to issue a subpoena and Hamot, which is a separate entity from UPMC, did not have any direct dealings with TLC, only its parent company Lake Erie Regional Health System of New York.

Sara Temes, attorney for the creditors’ committee, disagreed, saying Hamot was the “gatekeeper” for funds from UPMC to LERHSNY and also loaned the two hospitals in the organization, Brooks and Lake Shore, CEO Gary Rhodes.

The judge ruled not to quash the subpoena and asked the attorneys to work together to get things done without the need for excessive paperwork and attorney fees.

Fustine said he believed the judge made the wrong ruling and his client may appeal.

The court also withdrew a former motion to possibly have Brooks lease the Gowanda and Forestville clinics.

It was also decided the use of cash collateral agreements would be finalized by Dove with Brooks’ and UPMC’s lawyers with new adequate protection payments of $10,000 per month to be made.

Dove reported the hospital has $1.7 million in debt to secured creditors and between $5 million to $6 million in debt to unsecured creditors.

At a previous meeting it was announced Lake Shore Hospital will receive Interim Access Assurance Funding, which will allow the hospital to operate through March 2015. This is over a year after its original estimate for closing in December 2013.